Gold mostly unchanged on Fed stimulus outlook, Syria tension

Gold traded higher throughout the day but remained near its previous closing price as investors weighed expectations for Quantitative Easing tapering taking part this month against increased physical demand and persisting unrest in Syria. Silver declined,while palladium rose and platinum remained fairly unchanged.

On the Comex division of the New York Mercantile Exchange, gold futures for December settlement rose by 0.09% to $1 387.80 per troy ounce at 8:04 GMT. Prices ranged between days high and low of $1 393.80 and $1 385.30 per ounce respectively. The precious metal surged 1.6% on Friday after data showed the U.S. economy created less jobs than expected in August but settled the week 0.2% lower, a second straight weekly decline.

Gold has fallen 17% so far this year amid growing speculations that the Federal Reserve will pare its $85 billion per month bond purchasing program in the second half. Recent upbeat U.S. data added to those expectations and pressured the precious metal, which however rebounded on Friday following a downbeat report by the U.S. Labor Department.

The government agency reported that the U.S. economy created 169 000 jobs last month, which was well below analysts’ forecast for a rise to 180 000. June and July’s non-farm payrolls were revised downward by 74 000 and July’s final reading stood at 104 000, the lowest since more than a year.

Meanwhile, the U.S. unemployment rate fell to a 4 1/2-year low of 7.3% as more Americans gave up the search for work. The participation rate, the number of Americans who either have a job or are looking for one, fell to 63.2% from 63.4% in July, hitting the lowest value since August 1978.

Employment at factories expanded by 14 000, well above projections for a 5 000 surge from July’s 16 000 decrease, while employment at private service-providers rose less in August than the preceding month.

The Department of Labors downbeat statistics however are not expected to alter the view that the Fed will probably being decelerating its monetary easing program after the next FOMC meeting, due at September 17-18. According to a Bloomberg survey of 34 analysts conducted after the employment data on Friday, the Federal Reserve is still expected to reduce its $85 billion per month bond purchasing program this month by $10 billion.

Meanwhile, prices remaining below the $1 400 mark continued to provide steady demand for the metal. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, remained unchanged for a third straight day on Friday at 919.23 tons. According to data by the U.S. Commodity Futures Trading Commission, net-long positions on gold rose by 3.6% to 101 396 futures and options in the week ended September 3.

Data from China showed today that the countrys consumer inflation rose by 2.6% and remained below the government’s target, leaving extra room for mini financial stimulus, which is supportive for gold demand as the metal is used as a hedge against inflation. China’s producer-price index fell by 1.6% in August after dropping 2.3% in July, marking the smallest decline in six months.

Adding to the countrys economic activity stabilization, China’s total exports rose by 7.2% last month, exceeding analysts’ expectations for a 5.5% surge, data by the General Administration of Customs showed. Imports increased by 7%, below projections, but still above July’s 5.1% rise. The Asian nation is the worlds second biggest consumer of the metal after India and economic wellness boosts physical demand.

The precious metal also continued to draw support as persisting unrest in Syria spurs safe haven demand. he U.S. Senate is expected to vote on a resolution for a military strike against Syria by the end of the week with Obama having won the support of key lawmakers last week, including ones from the opposition. However, several prominent Congressmen said on Sunday that they had not been persuaded yet to approve a military intervention in Syria, leaving market players ambivalent about their expectations.

Meanwhile, President Bashar al-Assad continued to deny allegations that he used chemical weapons against civilians. Russian President Vladimir Putin said at the latest G20 meeting that he will keep supporting Assad’s regime and the U.S. will face opposition. Saudi Arabia backs a U.S.-led military strike against Syria, will Iran supports Russia’s stance.

Elsewhere on the precious metals market, silver dropped, while palladium rose. Platinum remained fairly unchanged. Silver December futures fell by 0.32% to $23.815 an ounce at 8:00 GMT and ranged between days high and low of $24.133 and $23.700 per ounce respectively. Meanwhile, platinum for October delivery traded at $1 495.00 per ounce, down 0.05% on the day. Prices held in range between days high and low of $1 499.20 and $1 492.05 an ounce. Palladium for December delivery rose by 0.27% to $698.70 per troy ounce and held in days range between $700.80 and $696.50 per ounce.